Small Business Optimism Jumps in January

The NFIB Small Business Optimism Index grew to 106.9, 2.0 points above December’s reading. January’s report was one of the highest readings in the 45-year history of the index. Six of the ten index components rose in January, while two declined. Thirty-two percent of business owners surveyed said the next three months was a good time to expand, five points more than last month’s reading.

Reported job creation fell four points, as 55% of businesses reported hiring or trying to hire. However, 49% reported few or no qualified applicants for the positions they were trying to fill. Twenty-two percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 20% of owners plan to create new jobs, unchanged from last month’s record high reading.

Seasonally adjusted, the net percent of owners expecting better business conditions increased four points to 41%. The percent of owners reporting higher sales in the past three months compared to the prior three months was a net 5%, a four point decline from December. Seasonally adjusted, the net percent of owners expecting higher real sales volumes fell three points, falling to 25% of owners. Capital spending was unchanged as 61% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months grew two points to 29%.

Credit concerns remained historically low, as just 3% of owners reported that all their borrowing needs were not met, unchanged from December. Only 2% of business owners surveyed reported that financing was their top business problem, compared to 19% citing taxes.

Read the NFIB report.

About Stephen Newton

Stephen Newton is an economic research associate at ABA.
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